CHARLESTON, W.Va. — Legislators coping with West Virginia’s half-billion dollar budget gap would almost certainly have to cut education and the Department of Health and Human Resources if they hope to solve the problem through cutting expenses.

Of the state’s general fund for the current fiscal year of just more than $4 billion dollars, public education accounts for almost half with $1.9 billion in expense. Right behind that is DHHR at $1.095 billion.

So the two amount to roughly three-quarters of the spending in the general fund.

 

During the past two weeks, the state Senate Finance Committee has studied both budgets through presentations by leaders in DHHR and the state Department of Education. The most recent agency presenting its budget, DHHR, went Tuesday.

The Senate Finance Committee, like its counterpart in the House of Delegates, has divided the budget into subcommittees in hopes of reaching a speedier resolution to dealing with the budget gap.

But if the conversation about DHHR is an example, it’s not coming easily.

Senator Tom Takubo, a Republican from Kanawha County, leads the subcommittee looking at DHHR’s budget. Given the across-the-board cuts of the past few years and the state’s poor health, especially as an outcome of its addiction crisis, Takubo is concerned about how much harm more cuts might cause.

“I just don’t see it,” Takubo said in an interview following Tuesday afternoon’s hearing. “The subcommittee last night, we went through everything line-by-line. Questioning funding, what it does, trying to bring it down as much as possible.

“It’s just hard to see anything at all that can really be cut that’s not going to have significant pain to somebody, with unintended consequences.”

Takubo said his committee is bipartisan and includes three physicians.

“We were all kind of shaking our heads at the end of it,” Takubo said of the subcommittee’s meeting last night to go over the DHHR budget. “We just don’t see any meaningful cuts without just transferring the cost that somebody’s going to have to pick up.”

Bill Crouch, the new DHHR secretary for the Justice administration, was among those presenting the agency’s budget to the Senate Finance Committee on Tuesday afternoon.

Crouch and the other agency leaders said DHHR is asking for less money from the general fund than it did last year.

“DHHR is actually proposing less general revenue this year than last year,” said Jeremiah Samples, a deputy secretary in the agency. “DHHR has worked very hard to keep our budget basically level, and in fact reduce the budget.”

Samples said the agency has cut or expired $181 million since 2015. He said noted that during each of past few years, there have been significant midyear cuts through orders from the governor to reduce funding to various agencies.

He said the agency has gone through its own internal efforts to cut. Privatization has been the top strategy, Samples said. “There’s just a recognition by the department that government institutions are not as effective and efficient at delivering direct services as the private sector,” he said.

Other efforts at cost reduction, Samples said, have included maximizing federal funding, eliminating various small programs with little proven return on investment, aggressively pursuing fraud detection, cutting the agency’s fleet and consolidating programs all across the department.

“Additional cuts, especially those of size, would have an impact,” Samples said at the end of his part of the agency’s presentation. “It’s at the policy discretion of this body and the executive branch to make that decision.”

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John Unger

During a period of questioning by committee members, Senator John Unger, D-Berkeley, asked if DHHR is actually having to accomplish more because of the opioid crisis while working with a flat budget.

“You’ve got this trend that’s impacting negatively in your department,” Unger said. “Something’s going to break because the pressures are more and the resources are flattened out.

Unger continued, “In theory, because of demands going up, you’re really taking cuts because you’re doing more for less?”

The senator concluded that if the agency’s ability to cope with West Virginia’s drug problem is diminished it will create repercussions affecting the state’s health and financial structure well into the future.

“That’s going to be telling about what we need to be spending if we don’t get a handle on this,” Unger said.

Samples responded, “As you see the DHHR state spend level off, it’s not because we have less need. The tsunami of this drug epidemic has hit across the department.”

Bill Crouch

Crouch said the agency does want to shuffle its resources to focus more on West Virginia’s opioid addiction epidemic.

“The governor’s biggest concern is the drug problem in West Virginia,” Crouch said. “We are going to attempt to tackle this in a comprehensive way by setting up an Office of Substance Abuse and Recovery. We will take all of the pieces of our budget and other pieces to try to fix this problem.”

One big uncertainty facing DHHR and its budget is how Congress and the Trump administration will deal with the Affordable Care Act. Crouch expects changes to Medicaid funding from the federal government, but that remains a big unknown.

“What we’re hoping is we do get block grants or at least less restrictions on how we spend this money,” Crouch told committee members. “We think we’re going to get Medicaid block grants and less money but we need less restrictions on that money so we’re not tied up on ways to do this.”

He said the agency would like to try selling its four nursing homes: “They are truly time bombs in terms of maintenance needs and at some point needing to replace the facility.”

And Crouch would like to try selling the state’s psychiatric hospitals next year. He also would like to explore selling other DHHR-owned properties around the state. He said the Bureau for Behavioral Health and Health Facilities owns or leases 50 facilities around the state, amounting to $950,000 in annual capital outlay and maintenance funding.

“It’s time to sell those to those providers or others if we can,” Crouch said. “We’re not any better at being landlords than we are being direct providers.”

Speaking after the meeting, Takubo said those are great ideas but he wonders how much savings could really go toward helping with the state’s half-billion dollar budget gap.

“There are little things in the future, like the hospitals and nursing homes with the state. I think that line item was like $105 million, but the vast majority of that is patient care. So even if tomorrow, we magically had someone come in, buy all these hospitals, take them over, the state’s still going to pay for that care,” Takubo said.

“You may save some facility costs, which would be relatively minimal — projected at $7 million or $9 million. It’s a lot but not when you’re facing a $500 million deficit. And that’s going to take time.”

Some of the senators on the Finance Committee honed in on the role and budget of Federally Qualified Health Centers, which refers to a reimbursement designation from the federal government. The gist of some of the questions is whether state expenditures in that area are necessary if most West Virginians now have health insurance as a result of the Affordable Care Act.

DHHR representatives cautioned that with the ACA in flux in Congress, it’s hard to make assumptions moving forward.

Takubo, again speaking after the hearing, said such questions have to be asked to determine if there are any areas of redundancy remaining in what DHHR does.

“DHHR has 5,400-plus employees. The question I’ve had there is, are there redundancies there?” Takubo said.

“When you’re just looking at a simple line item, you’ve got to get down in the weeds a little bit, find out if we’re really maximizing efforts here. That would have to be the secretary of the department. The Legislature’s not going to have the ability to walk through and look over the shoulder of that many people and see what they do on a daily basis.”

With few obvious ways to cut DHHR’s budget, Takubo is starting to give thought to Governor Jim Justice’s proposed 50-cent tobacco tax increase and the tax on “sugary drinks” that Justice touted as part of his latest budget proposal this week. The Justice administration estimates those tax moves would raise an additional $132.8 million in revenue.

Rahul Gupta

During the hearing, Takubo, a physician who owns a pulmonary practice, asked Rahul Gupta, the Commissioner of DHHR’s Bureau for Public Health, about the potential public health benefits of the two taxes.

“We’re trying to wrap our heads around the budget and one of things I keep harping on is we’ve cut down to the bone. The health care costs of this state continue to climb,” Takubo said.

“So what I’ve tried to say many many times to my fellow legislators is we’ll never get control of our budget if we don’t control health care costs. If we were as aggressive as we possibly could at curbing smoking rates – do you think that is a positive thing?”

“Tobacco and the consequences of obesity are the highest cost drivers in the state and across the country,” Gupta responded. “Almost nowhere that’s as high a burden as in state of West Virginia.”

Following the meeting, Takubo said he isn’t a fan of taxes but he could get behind the tobacco tax and sugary drinks tax if they lead to better health outcomes and lowered costs.

“There are revenue measures out there,” Takubo said. “The governor talked about another 50 cents on tobacco to finally get it above that dollar increase. That’s kind of a win-win. It generates income when we desperately need it. At the same time, it can impact not just this year’s budget but many future budgets.”

He said the studies on the impacts of discouraging sugary drinks aren’t as clear. But Takubo said the general principal of encouraging people to forego processed sugar is a sound health goal.

“Again, it’s a revenue measure that positively impacts us when we desperately need it,” he said. “At the same time, it can affect budgets in generations to come. So there’s not too many things out there in medicine where legislatively you could see a true impact on health. I think we’ve got to keep all options on the table.”

He concluded, “I’m not a tax guy but at the same time if you can kill two birds with one stone sometimes you’ve got to take the best option.”

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